An Interest Only loan is a type of loan where you pay only interest on the money you borrower for a fixed period within the loan term. Once the interest-only period ends, either a new principal and interest payment will be recalculated based on the remaining term, or the loan will balloon and become due at the end of the loan term. Interest-only periods can vary from 5 – 10 years and amortization terms can vary from 30-40 years. While in the interest-only period, you always have the option to pay any portion of the principal balance, so you can manage your interest only loan the way that works best for you.
Advantages to Interest Only Loans
- Lowest Possible Payment –Interest Only loans provide you with a way to get into the most house for the least possible payment.
- More Money in the Bank –While you pay only interest, you can use these additional savings to pay off any other high-cost debts and save even more money.
- Control Your Money –Take control of the money that you earn instead of putting it into your mortgage.
- Tax Deductible –The interest you pay on a mortgage is a tax deduction which saves you money on your income taxes. Be sure to consult a licensed tax professional for any tax deductions you may be eligible for.
Interest Only Loan Requirements
In order to obtain an Interest Only loan, you will either be looking to purchase a home in the near future or refinance a home that you currently own. If you are looking to make a new home purchase, the first step of this process is toget pre-approved. If you are looking to refinance your home, the requirements will differ slightly from a purchase. Speaking to one of our licensed loan officers will give you the education you need to make an informed decision so you canget your current mortgage refinanced.
